CEDH · CASELAW;JUDGMENTS;CHAMBER;ENG — 2 juin 2016

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BULGARIA   (Application no. 7031/05)                       JUDGMENT       STRASBOURG   2 June 2016   FINAL   17/10/2016   This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.   TABLE OF CONTENTS PROCEDURE THE FACTS I.     THE CIRCUMSTANCES OF THE CASE A.     The bank’s shareholders and management B.     The general meetings of the bank’s shareholders on 24 and 27   June 2004 C.     The Sofia City Court’s decisions to register the resolutions adopted at the two general meetings of shareholders D.     The criminal proceedings against Mr Bonev, Mr Panev and Mr   Ivanov 1.     The proceedings against Mr Bonev, Mr Panev and Mr Ivanov 2.     The proceedings against Mr Panev and Mr Ivanov E.     The service contracts between the bank and Mr Panev, Mr Ivanov and Mr   Radev and their attempt to take up office F.     The proceedings before the prosecuting authorities G.     The share transfer H.     The legal challenges against the Sofia City Court’s registration decisions 1.     The requests for revision 2.     The claims under section 74 of the Commerce Act 1991 I.     Measures taken by the BNB in relation to the bank J.     The bank’s winding-up K.     The freezing of Mr Panev’s and Mr Ivanov’s bank accounts II.     RELEVANT DOMESTIC LAW A.     The register of companies and legal challenges against entries in it and against resolutions of the general meeting of a company’s shareholders B.     Powers of the prosecuting authorities under section 119(1)(6) of the Judiciary Act 1994 C.     The BNB’s powers in relation to commercial banks and the rules governing bank insolvency D.     Freezing of the assets of managers of insolvent banks THE LAW I.     PRELIMINARY PROCEDURAL POINTS II.     STANDING TO COMPLAIN ON BEHALF OF THE BANK III.     THE PROSECUTING AUTHORITIES’ DECISIONS WITH RESPECT TO THE BANK’S MANAGEMENT Article 1 of Protocol No. 1 (protection of property) Article 6 § 1 of the Convention (right to a fair hearing) Article 13 of the Convention (right to an effective remedy) A.     The parties’ submissions B.     The Court’s assessment IV.     THE REVOCATION OF THE BANK’S LICENCE A.     The parties’ submissions B.     The Court’s assessment V.     THE PROCEEDINGS IN WHICH THE BANK WAS DECLARED INSOLVENT A.     The parties’ submissions B.     The Court’s assessment VI.     THE FREEZING OF MR PANEV’S AND MR IVANOV’S BANK ACCOUNTS A.     The parties’ submissions B.     The Court’s assessment VII.     THE CRIMINAL PROCEEDINGS A.     The parties’ submissions B.     The Court’s assessment VIII.     THE TRAVEL BANS A.     The parties’ submissions B.     The Court’s assessment IX.     OTHER ALLEGED VIOLATIONS OF THE CONVENTION AND PROTOCOL No. 1 X.     APPLICATION OF ARTICLE 41 OF THE CONVENTION A.     Pecuniary damage B.     Non-pecuniary damage C.     Costs and expenses D.     Default interest APPENDIX In the case of International Bank for Commerce and Development AD and Others v. Bulgaria, The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:   Angelika Nußberger, President ,   Khanlar Hajiyev,   Erik Møse,   Yonko Grozev,   Síofra O’Leary,   Carlo Ranzoni,   Mārtiņš Mits, judges , and Claudia Westerdiek, Section Registrar , Having deliberated in private on 26 April 2016, Delivers the following judgment, which was adopted on that date: PROCEDURE 1.     The case originated in an application (no. 7031/05) against the Republic of Bulgaria lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 17 February 2005. 2.     The application was in the first place lodged on behalf of International Bank for Commerce and Development AD (“the bank”), a company founded in 1991 that had its registered office in Sofia, Bulgaria. On 28 May 2005 the Bulgarian National Bank (“the BNB”) placed the bank under compulsory administration, and on 14 June 2005 revoked its licence (see paragraphs 64 and 67 below). On 29 June 2005 the Sofia City Court declared the bank insolvent and made an order for it to be wound up. On 17   August 2007 the same court closed the winding-up proceedings in respect of the bank and struck it out of the register of companies (see paragraph 72 below). The application was introduced on the bank’s behalf by the remaining applicants. 3.     The first of those applicants, Mr Boni Evlogiev Bonev, is a Bulgarian and Swiss national born in 1960 and living in Sofia. He was a shareholder in the bank (see paragraph 11 below). 4 .     The second and third of those applicants, Mr Svetlozar Venelinov Ivanov and Mr Atanas Radev Radev, are Bulgarian nationals born respectively in 1963 and 1937 and living respectively in Sofia and Varna. They said that on 24 and 27 June 2004 they had been appointed as members of the bank’s executive board (see paragraphs 16 and 17 below). 5.     The fourth of those applicants, Mr Alexander Stefanov Panev, is a Bulgarian national born in 1961 and living in Sofia. He said that on 24 and 27 June 2004 he had been appointed as executive director of the bank and chairman of its executive board (see paragraphs 16 and 17 below). 6.     The application was initially lodged also on behalf of twenty companies which were likewise shareholders in the bank (see paragraph   11 below): –     Bemahague Investments Ltd, Card Transaction Services Ltd, Carina Consultants Inc, Flavors, Fragrances and Chemicals (FFCH) Ltd, General Foods Int’l Corp, Geneltech Ltd, Industrial Finance Int’l Corp, Megatours-A New Dimension in Travel-Inc, Mossview Trade Inc, Petrofinance Ltd, Potenza Enterprises Ltd, and V.V.V. Holdings Corp, companies registered in Delaware, the United States of America; –     Briarfield Consultants Limited, McMaden Securities Limited, Navarro Resources Inc, and Shephard Securities Ltd, companies registered in Belize; and –     Navasota Investments Ltd, Ozark Ventures Inc, Parham Investment Services, and Yoakum Trading Inc, companies registered in the Turks and Caicos Islands, a British Overseas Territory. In a letter of 16 November 2005 those companies said that they wished to withdraw their complaints because they had transferred all of their shares in the bank to Mr Bonev (see paragraph 51 below), and because Mr Bonev’s failure to pay for those shares had become an internal issue between them following the placing of the bank in insolvent liquidation. 7.     The applicants were represented by Mr D. Kanchev and Ms   G.   Petkova, lawyers practising in Sofia. The Bulgarian Government (“the Government”) were represented by their Agent, Ms M. Dimova, of the Ministry of Justice. 8.     The applicants alleged, in particular, that (a) the prosecuting authorities had unlawfully interfered with the bank’s management; (b) the revocation of the bank’s licence by the BNB had been unlawful; (c) the proceedings in which the bank had been declared insolvent had not been fair; and (d) the freezing of Mr Panev’s and Mr Ivanov’s personal bank accounts had been disproportionate and not subject to review. 9.     On 25 September 2012 the Court decided to give the Government notice of the application. 10.     The Swiss Government, having been apprised of their right to intervene in the case in view of Mr Bonev’s Swiss nationality (Article 36 §   1 of the Convention and Rule 44 § 1 of the Rules of Court), said, in a letter of 2 October 2012, that they did not wish to avail themselves of that opportunity. THE FACTS I.     THE CIRCUMSTANCES OF THE CASE A.     The bank’s shareholders and management 11.     The bank was founded and entered in the register of companies in 1991. According to the BNB’s records, its shareholders on 31 March 2004 were the second applicant, Mr Bonev, who held 4.98% of the shares; his brother, Mr P.E.B., who also held 4.98% of the shares; the twenty companies listed in paragraph 6 above, each of which held between 4.98% and 2.81% of the shares; a Mr B.P., who held 0.19% of the shares; and a Mr   P.B., who held 1.20% of the shares (for a full breakdown, see the Appendix). 12.     At the material time the bank had a two-tier management system, consisting of an executive board and a supervisory board. Mr Panev and Mr   Ivanov were members of the executive board between 30 May 2003 and   5 April 2004. In May and June 2004 Mr B.P. (see paragraph 11 above) was member of the bank’s executive board and one of its executive directors. B.     The general meetings of the bank’s shareholders on 24 and 27   June 2004 13 .     In early 2004 tensions arose among the bank’s shareholders and between some of the shareholders and the bank’s management. On 18   March 2004 Mr Bonev and Flavors, Fragrances and Chemicals (FFCH) Ltd, acting in their capacity as shareholders who had held more than five per cent of the bank’s shares for more than three months, asked the executive board to call a general meeting of shareholders with a view to adopting amendments to the bank’s articles of association, reducing the number of members of the bank’s executive and supervisory boards, and replacing some of the boards’ members. The same day the executive board agreed to call such a meeting, but on 23 March 2004 the supervisory board set its resolution aside and called a general meeting of shareholders with a different order of business, to be held on 24 June 2004. 14 .     Thereupon Mr Bonev, Card Transaction Services Ltd, Flavors, Fragrances and Chemicals (FFCH) Ltd, Geneltech Ltd, General Foods Int’l Corp, Industrial Finance Int’l Corp, Megatours-A New Dimension in Travel-Inc, Petrofinance Ltd and V.V.V. Holdings Corp, acting in their capacity as shareholders who had held more than five per cent of the bank’s shares for more than three months, applied to the Sofia City Court for an order adding the points that they wished to have included on the general meeting’s order of business. On 14 May 2004 the chairman of the bank’s executive board and one of its executive directors objected to the request, saying that according to the bank’s register of shareholders, the persons who had made the request did not hold enough shares to be entitled to make one, and that the companies which had made the request had not produced proper credentials. On 8 June 2004 the Sofia City Court made an order in the terms sought by Mr Bonev and the companies, noting that they had proved that they had held the required number of shares for more than three months through notarised declarations. 15.     Separately, Mr Bonev and Flavors, Fragrances and Chemicals (FFCH) Ltd, again acting in their capacity as shareholders who had held more than five per cent of the bank’s shares for more than three months, asked the Sofia City Court to authorise them to call a separate general meeting of shareholders, with the order of business that they wished to have. To establish their capacity as shareholders, they enclosed with their request provisional share warrants issued in 2003. On 17 May 2004 the Sofia City Court upheld the request. On 20 and 26 May 2004 the chairman of the bank’s executive board and one of its executive directors, Mr B.P., asked the court to vary its order, arguing that the provisional share warrants had not been registered in the bank’s register of shareholders, and that the documents enclosed with the applicants’ request had not been issued by persons authorised to act on the bank’s behalf. On 20 and 28 May 2004 the court refused to vary its order, holding that by law that was not possible. 16.     On 24 June 2004 proxies representing the twenty companies listed in paragraph 6 above showed up at the bank’s premises with a view to taking part in the general meeting of shareholders. Mr P.E.B, Mr B.P. and Mr P.B., who between them held 6.37% of the bank’s shares, were also represented. The polling commission entrusted by the bank’s executive board to check the shareholders’ credentials refused to accept the provisional share warrants through which the twenty companies sought to establish their capacity as shareholders. Concluding that only 6.37% of the shares were duly represented, the commission decided to adjourn the meeting for another date. A dispute ensued, and the twenty companies’ proxies held a parallel general meeting in the stairwell of the bank’s building. They resolved to amend the bank’s articles of association, reduce the number of members of its executive and supervisory boards from five to three, remove four members of the supervisory board and four members of the executive board, including Mr B.P., and appoint two new members of the supervisory board and three new members of the executive board, who were to be also executive directors: the applicants Mr Panev, Mr Ivanov and Mr Radev. 17.     On 27 June 2004 Mr Bonev’s and the twenty companies’ proxies tried to hold another general meeting of shareholders at the Sofia Hilton hotel, as authorised by the Sofia City Court (see paragraph 15 above). Mr   P.E.B, Mr B.P. and Mr P.B. were also represented. The police showed up, trying to seize the provisional share warrants which Mr Bonev’s and the twenty companies’ proxies were supposed to use to establish their capacity as shareholders, but could apparently not find them. The police were acting on an order issued by the prosecuting authorities in connection with criminal proceedings concerning the genuineness of those warrants, which they had opened pursuant to complaints by Mr B.P. (see paragraph 22 below). In view of the failure of the proxies to produce valid share warrants, the polling commission entrusted by the bank’s executive board to check the shareholders’ credentials found that only 6.37% of the shares were duly represented and decided to adjourn the meeting for another date. However, Mr Bonev’s and the twenty companies’ proxies held a parallel general meeting in an adjoining room, and adopted the same resolutions as the ones adopted on 24 June 2004. C.     The Sofia City Court’s decisions to register the resolutions adopted at the two general meetings of shareholders 18.     On 16 August 2004 the Sofia City Court, sitting in private, decided to enter the changes resolved upon at the general meeting on 24 June 2004 (see paragraph 16 above) in the register of companies. The court found that the change in the bank’s management and the amendment of its articles of association had been duly carried out. It registered the amendment to the bank’s articles of association and the reduction of the number of members of its executive and supervisory boards from five to three. The court also struck out of the register four members of the supervisory board and four members of the executive board, including Mr B.P., and registered two new members of the supervisory board and three new members of the executive board, who were also to be executive directors: the applicants Mr Panev, Mr   Ivanov and Mr Radev. Lastly, the court registered Mr Panev as chairman of the executive board. The court specified that its decision was to be entered in the register of companies and published, and that it was not subject to appeal. 19.     The court’s decision was entered in the register of companies the afternoon of the following day, 17 August 2004. In the morning a notary sent to the register of companies by Mr B.P. certified that the decision had not yet been entered in the register. The same day the court issued a certificate reflecting the changes in the bank’s registration. 20.     On 24 August 2004 the Sofia City Court, sitting in private, decided to enter the changes and amendments resolved upon at the general meeting on 27 June 2004 (see paragraph 17 above) in the register of companies. The court found that the changes in the bank’s management and the amendment of its articles of association had been duly made. The changes registered by the court were identical to the ones registered with its decision of 16 August 2008 (see paragraph 18 above). 21.     Subsequently, Mr B.P. and Mr P.B. sought revision of those two decisions and brought claims for the annulment of the shareholder resolutions whose registration they ordered (see paragraphs 52-58 below). D.     The criminal proceedings against Mr Bonev, Mr Panev and Mr   Ivanov 1.     The proceedings against Mr Bonev, Mr Panev and Mr Ivanov 22.     On 19 May 2004 Mr B.P. wrote to the police and to the Sofia District Prosecutor’s Office, alleging that the provisional share warrants on which Mr Bonev and Flavors, Fragrances and Chemicals (FFCH) Ltd had relied to obtain the court order of 17 May 2004 (see paragraph 15 above) were false and did not correspond to the entries in the bank’s register of shareholders. He pointed out that the warrants had been signed by Mr Panev and Mr Ivanov, and asked the authorities to open criminal proceedings and check whether any criminal offences had been committed in relation to that. 23.     On 4 June 2004 the police issued an order for Mr Panev’s arrest for twenty-four hours. He was arrested and released later the same day. It does not appear that he has attempted to seek judicial review of his detention. 24.     In the following days Mr Panev and Mr Ivanov were charged with making false private documents. Mr Bonev was, for his part, charged with using a false official document. The charges were later amended: Mr Panev and Mr Ivanov were charged with making false official documents, and Mr   Bonev was charged with knowingly using a false document. 25 .     On 11 June 2004 the Sofia District Prosecutor’s Office, noting that Mr Panev and Mr Ivanov had in the past four years travelled extensively out of the country, which in its view meant that they could seek to evade criminal liability by fleeing abroad, banned them from leaving the country. On 23 July 2004 it made the same decision with respect to Mr Bonev. 26.     On 29 December 2004 the Sofia District Prosecutor’s Office turned down Mr Bonev’s, Mr Panev’s and Mr Ivanov’s requests that the travel bans be lifted. It reasoned that, in view of the advanced stage of the pre-trial proceedings, their prolonged absence from the country might cause delays. 27.     The preliminary investigation was completed in the end of December 2004 and on 11 January 2005 the three applicants were indicted. However, finding that the indictment suffered from various defects, on 25   January 2005 the Sofia District Court referred the case back to the prosecuting authorities. 28.     On 14 June 2005 the Sofia District Prosecutor’s Office turned down a request by Mr Bonev to be allowed to travel to Switzerland for business meetings in July, August, September and October 2005. 29.     On 27 June 2005 the Sofia District Prosecutor’s Office re-submitted the indictment, and on 22 July 2005 the Sofia District Court set the case down for trial on 6 December 2005. 30.     In the meantime, on 11 July 2005 the Sofia District Court refused a request by Mr Bonev to be allowed to travel to Switzerland for business meetings. It held that there was no evidence that he had a pressing need to travel there. However, on 21 September and 19 October 2005 the court allowed Mr Bonev to travel abroad in October and the first half of November 2005 respectively. On 27 October 2005 it allowed him to travel to Turkey in the end of November 2005 for a business seminar. 31.     The Sofia District Court heard the case on 6 December 2005 and   14   March, 5 June and 19 October 2006. 32.     At the hearing on 6 December 2005, noting that Mr Bonev had duly appeared and had not attempted to flee during the investigation, the court allowed him to travel abroad during the period until the following hearing. On 17 February 2006 the court allowed Mr Bonev to travel to Belgium in the second half of March 2006 for business meetings. 33.     On 4 April, 26 April and 5 May 2006 respectively the Sofia District Court lifted the travel bans imposed on Mr Bonev, Mr Panev and Mr   Ivanov. 34.     On 19 October 2006 the Sofia District Court acquitted Mr Panev, Mr   Ivanov and Mr Bonev. Its judgment was not appealed against and became final on 4 November 2006. 2.     The proceedings against Mr Panev and Mr Ivanov 35.     On 14 and 18 October 2004 respectively Mr Ivanov and Mr Panev were charged with forgery offences in connection with their participation in the general meeting of shareholders of the bank on 24 June 2004 (see paragraph 16 above). On 18 January 2005 the Sofia District Prosecutor’s Office banned them from leaving the country. Four other persons were charged as well. 36.     On 13 April 2005 Mr Panev, Mr Ivanov and their co-accused were indicted. However, finding that the indictment suffered from various defects, on 3 June 2005 the Sofia District Court referred the case back to the prosecuting authorities. 37.     On 27 November 2005 the Sofia District Prosecutor’s Office re ‑ submitted the indictment. The Sofia District Court heard the case on four unspecified dates in 2005-06. 38.     On an unspecified date in the autumn of 2005 Mr Panev and Mr   Ivanov asked the Sofia District Court to lift the travel bans. In a decision of 24 November 2005 the court refused their request, but on 4 April 2006 lifted the bans. 39.     On 11 July 2006 the Sofia District Court acquitted Mr Panev, Mr   Ivanov and their four co-accused. On 25 July 2006 the prosecution appealed but then withdrew its appeal, and on 18 December 2006 the Sofia City Court discontinued the appeal proceedings. E.     The service contracts between the bank and Mr Panev, Mr Ivanov and Mr   Radev and their attempt to take up office 40.     On 16 August 2004 Mr Panev, Mr Ivanov and Mr Radev entered into service contracts with the bank, represented by a member of its supervisory board. They undertook to sit on the bank’s executive board for three years following the registration of the resolutions of the general meeting of shareholders to appoint them as members of that board. In return, each of them was to receive a monthly salary of 10,000 Bulgarian levs (BGN) plus a host of other benefits. 41.     The same day Mr Panev and Mr Ivanov tried to take up their duties, but the bank’s former management refused to vacate their offices and called the police, saying that they were not aware of any resolution to remove them. The next day, 17 August 2004, the bank’s former management forced the applicants out of the bank’s building, with help from the police. It appears that the police were acting on orders from the prosecuting authorities (see paragraph 42 below). F.     The proceedings before the prosecuting authorities 42.     On 17 August 2004 the Sofia City Prosecutor’s Office ordered the police to assist Mr B.P. in preventing any changes in the status quo in the bank’s management and operations, and to warn Mr Panev, Mr Ivanov and Mr K.Y., a newly registered member of the bank’s supervisory board, to refrain from any actions in relation to that until the matter had been duly resolved by the competent authorities. It relied on section 119(1)(6) of the Judiciary Act 1994 (see paragraph 77 below), and reasoned that the Sofia City Court’s decision of 16 August 2004 (see paragraph 18 above) was being verified by the Sofia District Prosecutor’s Office, that the record drawn up by the notary public (see paragraph 19 above) made it apparent that that decision had not been entered in the register of companies, which meant that it did not in fact exist, that Mr B.P. had applied to the Supreme Court of Cassation to reopen the proceedings and annul that decision (see paragraph 52 below), and that by trying to put the decision into effect Mr   Panev, Mr Ivanov and Mr   K.Y. were interfering with the bank’s normal business. The prosecutor found that, in view of the possibility for them to dispose of the bank’s documents and assets and imperil the interests of the bank’s depositors, that gave rise to a real risk of irreparable damage. 43 .     Mr Panev, Mr Ivanov and Mr K.Y. appealed to the Sofia Appellate Prosecutor’s Office, arguing that the order was unlawful and arbitrary. They pointed out that the Sofia City Court’s decision was valid and immediately enforceable, that no appeal lay against it to the Supreme Court of Cassation, and that the prosecuting authorities had no power to stay its enforcement. The question whether a judicial decision had been entered in the register of companies was to be established on the basis of official documents issued by the competent court, not of a record drawn up by a notary public outside his competence. The certificate issued by the Sofia City Court (see paragraph   19 above) showed that its decision had in fact been duly entered in the register of companies. 44 .     On 23 August 2004 the Sofia Appellate Prosecutor’s Office dismissed the appeal. It noted that the Sofia City Prosecutor’s Office had been spurred into action by information, given to it by the Sofia District Prosecutor’s Office, that the Sofia City Court’s decision to make changes in the bank’s registration might have been based on false documents. At the time when the Sofia City Prosecutor’s Office had issued its order, the Sofia City Court’s decision had not yet been entered in the register of companies. Proceedings against that decision were pending before the Supreme Court of Cassation. All of that showed that until the Sofia District Prosecutor’s Office had completed its inquiry into the matter or until the Supreme Court of Cassation had given judgment, there would continue to exist a risk of changes in the status quo and irreparable damage to the bank. 45 .     Mr Panev, Mr Ivanov and Mr K.Y. appealed to the Supreme Cassation Prosecutor’s Office, reiterating their arguments. 46 .     On 7 September 2004 the Supreme Cassation Prosecutor’s Office dismissed the appeal. It reasoned that it was beyond doubt that the prosecuting authorities were faced with a judicial decision under challenge and with evidence that that decision had been obtained through the use of false documents. Moreover, the decision had been issued in spite of a decision staying the registration proceedings and the existence of pending contentious proceedings. The appellants’ argument that the Supreme Court of Cassation had no jurisdiction to hear a legal challenge against the Sofia City Court’s decision was unavailing because the prosecuting authorities were not competent to make pronouncements on such points. Faced with pending judicial proceedings and a pending criminal investigation, they were bound to take measures to prevent changes in the status quo before any judicial resolution of the matter. The appellants’ attempts to change that status quo were premised on rights acquired through a judicial decision based on false documents. It was necessary for the judiciary to check the lawfulness of that decision and for the investigating authorities to gather evidence with a view to uncovering the truth. The bank had to be protected against damage flowing from offences that had already been committed and from the risk of future offences. The prerequisites of section 119(1)(6) of the Judiciary Act 1994 (see paragraph 77 below) were therefore in place. 47 .     Mr Panev, Mr Ivanov and Mr K.Y. appealed to the Chief Prosecutor, arguing that the prosecuting authorities had acted in a patently unlawful way and in excess of their powers. Their decisions had been based on false findings of fact, and on the finding – not based on a final conviction – that offences had been committed by them. 48 .     On 28 September 2004 the head of the economic crime division of the Supreme Cassation Prosecutor’s Office, to whom the case had been assigned, dismissed the appeal. He reasoned that the prosecuting authorities had acted lawfully and within their powers under section 119(1)(6) of the Judiciary Act 1994 (see paragraph 77 below). The Sofia District Prosecutor’s Office was investigating the making of false documents with a view to obtaining changes in the bank’s registration, and the Sofia City Court’s decision had been challenged before the Supreme Court of Cassation. There had therefore been a need to preserve the status quo with a view to ensuring the normal operation of the bank. 49.     The same day, 28 September 2004, the Sofia District Prosecutor’s Office ordered the police to take measures to ensure compliance with the Sofia City Prosecutor’s Office’s order of 17 August 2004 (see paragraph 42 above) and the preservation of the status quo in the bank. It noted that criminal proceedings had been instituted against members of the bank’s newly appointed management in relation to documentary offences, and that information existed that a group of persons had tried to enter the bank’s premises. Mr B.P. and the applicants Mr Panev and Mr Ivanov had complained to the prosecuting authorities in relation to that. Since the criminal proceedings concerned allegations of using false documents to obtain judicial decisions to make entries in the register of companies, it was appropriate to maintain the status quo pending the resolution of the case. Indeed, this had already been ordered by the higher prosecutor’s offices, whose decisions were mandatory for the Sofia District Prosecutor’s Office. The decision did not mention the legal provisions on which it was based. 50.     In the following months Mr Bonev wrote a number of letters to the Chief Prosecutor and tried to meet him in person with a view to obtaining the quashing or varying of the above prosecutors’ decisions, to no avail. He also lodged complaints with the Minister of Justice and the Supreme Judicial Council. G.     The share transfer 51.     On 25 August 2004 the twenty companies listed in paragraph 6 above transferred their shares to Mr Bonev by endorsing the provisional share warrants issued in 2003. As a result, he became the owner of 93.63% of the bank’s shares. The companies submitted that Mr Bonev paid part of the shares’ price immediately and undertook to pay the remainder when the transfer would be registered in the bank’s register of shareholders. The companies submitted that they could not obtain the remainder of the price because the bank’s former management, who were de facto running the bank by virtue of the prosecutors’ decisions outlined in paragraphs 42-49 above, refused to register the transfer. H.     The legal challenges against the Sofia City Court’s registration decisions 1.     The requests for revision 52.     On an unspecified date in 2004 Mr B.P. and Mr P.B. sought revision of the Sofia City Court’s decisions of 16 and 24 August 2004 (see paragraphs 18 and 20 above). 53.     In two decisions of 4 February 2005 (опр. № 6 от 04.02.2005 г. по гр. д. № 554/2004 г., ВКС, І т. о., and опр. № 7 от 04.02.2005 г. по гр. д. № 483/2004 г., ВКС, І т. о.) a three-member panel of the Supreme Court of Cassation refused to examine the requests, holding that judicial decisions making entries in the register of companies were not subject to revision. Such decisions did not determine disputes between opposing litigants and did not enjoy res judicata . The proper way to contest entries in the register of companies obtained by criminal means was by way of a claim under Article 431 § 2 of the Code of Civil Procedure 1952 aiming to have the entries erased under Article 498 of that Code (see paragraph 76 below). Mr   B.P. and Mr P.B. appealed. In two decisions of 28 June 2005 (опр. от   28.06.2005 г. по гр. д. № 53/2005 г., ВКС, петчл. с-в, and опр. № 28 от 28.06.2005 г. по гр. д. № 52/2005 г., ВКС, петчл. с-в) a five-member panel of the Supreme Court of Cassation upheld the three-member panel’s rulings, fully agreeing with them. 2.     The claims under section 74 of the Commerce Act 1991 54.     In the meantime, Mr B.P. and Mr P.B. brought claims against the bank under section 74 of the Commerce Act 1991 (see paragraph 76 below), asking the Sofia City Court to annul the resolutions of the general meetings of shareholders held on 24 and 27 June 2004 (see paragraphs 16 and 17 above). 55 .     In two judgments of 28 February and 7 March 2005, the Sofia City Court allowed the claims and annulled all resolutions adopted by the two meetings. It found that the meetings had been adjourned by the polling commission for lack of quorum and had not taken place, and that the parallel meetings had not been valid, chiefly because the persons who had taken part in them had not established their capacity as shareholders on the basis of valid provisional share warrants. 56 .     Following appeals by the bank, represented by the management appointed in June 2004 (see paragraphs 16 and 17 above) and registered by the Sofia City Court in August 2004 (paragraphs 18-20 above), on 16 and 19 June 2006 respectively the Sofia Court of Appeal quashed those judgments and dismissed the claims. It found that the persons who had held the parallel meetings had in fact represented 93.62% of the bank’s capital. The bank’s records, which fully matched those of the BNB, and a document issued by Mr B.P. in his capacity as executive director on the day of the meeting, showed that they had indeed been shareholders in it. 57.     On appeals by Mr B.P. and Mr P.B., in two judgments of 7 June and   3 July 2007 (реш. № 111 от 07.06.2007 по т. д. № 598/2006 г., ВКС, І   т.   о., and реш. № 113 от 03.07.2007 по т. д. № 600/2006 г., ВКС, І т. о.) the Supreme Court of Cassation quashed the Sofia Court of Appeal’s judgments and annulled the resolutions of the two general meetings. It held that, where nominative shares which had still not been issued were concerned, the only way of proving that a person was a shareholder entitled to take part in a general meeting was by producing a valid provisional share warrant. This had not happened at the two meetings. They had therefore been held by persons whose capacity as shareholders had not been duly established, and all resolutions adopted by them were unlawful. 58.     On 27 June and 18 July 2007 the Sofia City Court, acting of its own motion (see paragraph 76 below), and noting that the resolutions of the general meetings of 24 and 27 June 2004 had been ultimately annulled by the Supreme Court of Cassation, erased the entries in the register of companies relating to those resolutions. I.     Measures taken by the BNB in relation to the bank 59.     Between September 2004 and April 2005 the applicants repeatedly asked the BNB to exercise its supervisory powers and take measures to resolve the bank’s situation. On 4 October 2004 the BNB wrote to the Chief Prosecutor with a view to elucidating the effect of the prosecutors’ decisions outlined in paragraphs 42-49 above on the bank’s management, but apparently did not receive a reply. 60.     On 10 February 2005 the BNB’s deputy-governor in charge of banking supervision noted that Mr Panev and Mr Ivanov, who had been duly registered as members of the bank’s executive board, were being prevented from carrying out their duties as a result of the decisions of the prosecuting authorities (see paragraphs 42-49 above). That made it impossible for the bank’s executive board to function. The attempts to approach the Chief Prosecutor with a view to solving the problem had proved unfruitful. At the same time, a check of the bank’s finances carried out in December 2004 showed that its credit portfolio was deteriorating due to the ever more frequent failure of its debtors to service considerable loans extended by the bank, and that the bank was not carrying out proper credit ‑ risk assessments. All of that seriously affected its stability and the interests of its creditors and depositors. It was therefore necessary to take urgent measures to solve the problem with the bank’s management. The BNB’s deputy-governor accordingly decided to call a meeting of the bank’s supervisory board on 11 February 2005 with a view to taking measures, possibly including replacing the members of the bank’s executive board, that could allow the bank to be effectively managed. The order specified that it was immediately enforceable and not subject to judicial review. 61.     The next day, 11 February 2005, the bank’s supervisory board held a meeting at which it resolved to relieve Mr Ivanov of his duties as executive director of the bank and member of its executive board, and to appoint a Mr   S.S. in his stead. The board noted that Mr Ivanov’s removal was not due to any failure on his part but to factors beyond the bank’s control. The next day, 18 February 2005, the BNB informed the bank that it gave its regulatory approval to the changes in the bank’s executive board. 62.     On 18 February 2005 Mr Panev and Mr S.S. asked the Sofia City Court to register the supervisory board’s resolution. On 17 March 2005 Mr   B.P. and Mr Bonev’s brother, Mr P.E.B., acting in their capacity as shareholders in the bank, asked the court not to proceed with the registration pending the outcome of the proceedings in which Mr B.P. and Mr P.B. had challenged the resolutions of the general meetings of shareholders of 24 and 27 June 2004 (see paragraph 54 above). On 21 March 2005 the court upheld that latter request, noting that the general meeting’s resolutions under challenge included the one to appoint the supervisory board whose resolution the court was being asked to enter in the register of companies. This registration was therefore to be adjourned pending the outcome of the proceedings against the general meeting’s resolutions. 63.     In the following months the BNB repeatedly instructed the bank to take steps to overcome its financial difficulties. On 4 May 2005 it noted that, contrary to a statutory rule prohibiting banks from exposing more than a quarter of their capital to any one debtor, the bank had, as early as July 2004, extended a large loan to a company. In spite of the BNB’s instructions to fix that, the bank later had, on the contrary, vastly increased its exposure to that company. It was also overly exposed to other debtors, and faced with a serious deterioration of its credit portfolio, with ever more frequent failures by its nine principal debtors to service their loans. That required the bank to increase its non-performing loan provisions, but doing so would deplete its capital to a level requiring revocation of its licence. The BNB therefore asked all persons engaged with running the bank to join efforts to remedy its situation, and instructed the bank immediately to bring its exposure into line with the statutory requirements and collect its overdue loans from nine companies and all of its loans from another company. The BNB also barred the bank from taking in new term deposits, except from shareholders, and warned it that failure to comply with those instructions would lead to harsher measures, including the appointment of special administrators or revocation of its licence. 64.     On 28 May 2005 the BNB’s deputy-governor in charge of banking supervision decided to place the bank under compulsory administration and to appoint two special administrators to run it for three months. She noted that it had already been established that the bank’s financial situation had substantially deteriorated and that its capital was below the amount required by law, which called for immediate remedial action; in particular, the collection of some of the loans extended by the bank. Despite instructions to that effect by the BNB and a warning that failure to act would trigger harsher measures, the bank’s management had not taken such action. A report by an inspector appointed by the BNB showed that the bank’s liquidity was worsening daily. The bank was therefore at risk of insolvency that its shareholders and management had not taken steps to avert. There was uncertainty in relation to the persons running the bank: those actually doing so no longer featured in the register of companies and were not in law entitled to act on the bank’s behalf, whereas those featuring in the register could not in fact do so because of the decisions of the prosecuting authorities (see paragraphs 42-49 above). That threw doubt on the reliability of the reports which the bank was submitting to the BNB; there were reasons to believe that its financial situation was worse than transpiring from these reports. At the same time, the infighting between the bank’s shareholders precluded outside assistance. All that showed that the interests of the bank’s depositors were at serious risk, and the BNB had no choice but to place it under administration and appoint special administrators to run it. The BNB specified that its order was immediately enforceable and not subject to judicial review. 65.     In the following days the special administrators invited the bank’s management and shareholders to take steps to resolve the bank’s situation. Mr Bonev entered into settlements with the other shareholders – his brother, Mr B.P. and Mr P.B. – whereby they agreed to resolve the disputes between them. Mr Bonev also tried to find companies which would take over the non-performing loans extended by the bank. However, on 8 June 2005 the special administrators wrote to Mr Bonev, advising him that the results of an audit that they had ordered showed that the only way to prevent the bank from sliding into insolvency was to sell its risky loans immediately. The administrators went on to say that if Mr Bonev was serious about preventing that from happening, he had to buy those loans before 5 p.m. the next day, 9   June 2005. Otherwise, the administrators would be bound to notify the BNB that the bank was insolvent. 66.     On 14 June 2005 the applicants wrote to the BNB’s governor and deputy-governor, complaining of undue pressure and improper conduct on the part of the special administrators, and saying that one of them was forcing Mr Bonev to sell his shares in the bank on very unfavourable terms. 67.     The same day, 14 June 2005, the BNB’s governor, relying on section   21(2) and (5) of the Banks Act 1997 (see paragraph 78 below), and acting on a recommendation by the deputy-governor in charge of banking supervision, revoked the bank’s licence and extended the term of office of the two special administrators previously appointed to run the bank (see paragraph 64 above). He noted that a report by those administrators filed the previous day and the documents enclosed with it, all of which had been drawn up in line with the BNB’s requirements, showed that the bank’s liabilities exceeded its assets by BGN 19,181,000 and that its capital was negative   – minus BGN 19,184,000. It was thus clear that the bank was insolvent, and that the BNB had to revoke its licence and petition the courts to open winding-up proceedings against it. The special administrators previously appointed to run the bank were to continue to carry out their duties pending the appointment of liquidators by the court. The governor specified that his decision was immediately enforceable and not subject to judicial review. J.     The bank’s winding-up 68.     Following its decision to revoke the bank’s licence, on 15 June 2005 the BNB petitioned the Sofia City Court to declare the bank insolvent and wind it up. As required by law (see paragraph 79 below), in those proceedings the bank was represented by the special administrators previously appointed by the BNB (see paragraphs 64 and 67 above and paragraph 79 below). 69.     Mr Bonev sought